Music labels clamping down on music pirates scored their first victory in Germany on Tuesday. Meanwhile, the competition in the legal online music trade is heating up with the launch of Apple iTunes in Europe next week.

For one music enthusiast in the Eastern German city of Cottbus, the good times of downloading music for free via peer-to-peer file-sharing programs like Kazaa came to an abrupt end on Tuesday. He was convicted in a German court of copyright infringement, according to a statement released by the German Federal Association of the Phonographic Industry in Berlin.

The 23-year-old will have to fork over a hefty €8,000 ($9,855) in fines in addition to covering the legal costs of the case. The case is expected to set a precedent for future cases, said Gerd Gebhard, the Chairman of the association, and will also serve as a cautionary tale to those considering illegal music file-sharing.

Clamping down on illegal downloaders

The case, one of 68 brought against people who download music illegally in Germany, represents a significant victory for a music industry desperate to stem the tide of lost profits since music file-sharing and downloading software like Kazaa and Napster became hugely popular.

In Germany alone, Internet piracy contributed to a 20 percent drop in profits, which has resulted in the loss of thousands of jobs, according to industry officials. Globally, losses are estimated at $2.4 billion (€1.96) a year.

The strategy of pursuing illegal music pirates in the courts is part of a two-pronged approach. In addition, music industry executives are hoping to bring illegal file-swappers back into the market by offering them the chance to download music legally -- for a fee -- via a host of new legal and industry-sponsored online platforms.